Penny, inc. employs a process costing system. direct materials are added at the beginning of the process. here is information about july's activities: on july 1: beginning inventories 850 units, 60% completedirect materials cost $5,000conversion costs $4,000during july: number of units started 15,000direct materials added $155,000conversion costs added $83,520on july 31: ending inventories 1,600 units, 40% completeusing the fifo method, the cost per equivalent unit for materials used during july was $10.78 $10.33 $9.78 $10.65

In december of 2004, the company you own entered into a 20-year contract with a grain supplier for daily deliveries of grain to its hot dog bun manufacturing facility. the contract called for "10,000 pounds of grain" to be delivered to the facility at the price of $100,000 per day. until february 2017, the supplier provided processed grain which could easily be used in your manufacturing process. however, no longer wanting to absorb the cost of having the grain processed, the supplier began delivering whole grain. the supplier is arguing that the contract does not specify the type of grain that would be supplied and that it has not breached the contract. your company is arguing that the supplier has an onsite processing plant and processed grain was implicit to the terms of the contract. over the remaining term of the contract, reshipping and having the grain processed would cost your company approximately $10,000,000, opposed to a cost of around $1,000,000 to the supplier. after speaking with in-house counsel, it was estimated that litigation would cost the company several million dollars and last for years. weighing the costs of litigation, along with possible ambiguity in the contract, what are three options you could take to resolve the dispute? which would be the best option for your business and why?